“The Best Bear Market Ever”: 5 Things To Watch Out For In Bitcoin This Week
A further drop in Bitcoin prices is met with bullish forecasts across the board as traders expect a revival in October.
Bitcoin (BTC) begins a new week with a decidedly bearish move, but one that fails to shake investor confidence in the bull run.
A mixed weekend saw the price of Bitcoin close above $ 47,000 USD only to lose all of its previous gains and fall below the $ 45,000 mark later.
It’s a tough situation, not just for Bitcoin, but stocks and sentiment take a hit as the Evergrande implosion in China wears off. What could affect the cryptocurrency market?
As analysts expect a “rough” week for Bitcoin price action, we will look at five factors to consider when charting the direction that Bitcoin could take in the near term.
El Salvador buys Bitcoin during the recession
Bitcoin’s spot price action hardly inspires traders at the beginning of the week.
A reversal from the previous strength on Sunday worsened overnight and the price of Bitcoin fell below the $ 46,000 mark.
Amid turmoil in traditional markets, with China’s Evergrande saga leading the way, this week may not offer profitable trades. For the popular merchant Pentoshi, now is the time to take stock and wait for the situation to be resolved.
As reported, the level at $ 44,000 USD represents a wall of support that Bitcoin now seems ready to retest. A deeper dive could still generate $ 41,000 or even $ 38,000 USD, the latter being a key Fibonacci retracement level.
However, overall, the mood remains strong in favor of a resurgence of the cryptocurrency markets in the fourth quarter.
Among those “buying the drop” is the government of El Salvador, which on Monday confirmed that it had bought an additional 150 BTC for a total of 700 BTC.
“They can never beat you if you buy the dips,” President Nayib Bukele said in a series of characteristic tweets about his country’s Bitcoin policy.
Bitcoin daily chart (BTC / USD)
Bitcoin stands “as an absolute champion”
It’s a tough environment, and all things considered, Bitcoin is performing much better than expected, analysts say. Whether it’s stocks or safe-haven gold, the outlook is decidedly less rosy this week. The S&P 500, for example, is on track to close below its 50-day moving average for the first time since June.
Gold is heading toward April lows, while against the Nasdaq 100 index, veteran trader Peter Brandt noted, the precious metal is close to its 20-year low.
“Considering the rise of the dollar (it is close to the high of the cycle), the weakness of the stocks, the fall of the metals, BTC acts as an absolute champion, as it rejects the idea of entering a cycle. Relatively strong, ”wrote trader, entrepreneur and investor Bob Lukas in a recent summary.
The strength of the US dollar is clearly remarkable, with the US dollar index (DXY) approaching 94 in a typical headwind for Bitcoin.
If the status quo starts to change, then the momentum for BTC to perform much better is clearly in place.
Daily chart of the US Dollar Index (DXY)
Bitcoin’s fundamentals have never looked better – cliche perhaps – but this week the numbers speak for themselves.
Both the difficulty and the hash rate stubbornly refuse to follow a downtrend, indicating that the underlying conviction of the miners remains firmly bullish.
Now the mining difficulty, which mitigated the impact of the May mining defeat in China for months, is expected to register its fifth consecutive increase on Tuesday.
This is a rare event – the last time the difficulty increased five times in a row started in late 2019 before the cross-market crash of March 2020 soured the mood. Even the bull market that followed and hit record highs of $ 64,500 USD was unable to duplicate the feat.
As such, for those who believe that price action should follow the fundamentals of the network, the outlook seems more optimistic than ever.
The hash rate confirms it: despite the average price performance over the past week, estimates continue to show 140 exahashs per second (EH / s) for the network, which is just 17% below all-time highs. .
For investor Vince Prince, a regulatory commentator on hash rate performance, the latest contrast between metric price and spot price is cause for confidence.
“While Bitcoin has been massively emptied, the hash rate actually increased,” he summed up last week.
“This shows a relative strength of bullish demand.”
Zoom out, it’s “bullish only”
Bitcoin’s high is now above the all-time high for spot prices in 2017 of $ 21,000 USD. Its 200-week moving average (WMA), widely regarded as a bottom floor price and a level that Bitcoin has never broken, now sits at $ 15,600.
Bitcoin 200WMA vs Realized Summit vs BTC / USD chart
Source: PlanB / Twitter
These aren’t just numbers, says analyst PlanB, creator of Bitcoin’s action-to-flow pricing models. The relationship between the realized cap, an expression of market capitalization based on the price at which each Bitcoin last moved, and the 200WMA is a useful indicator of the growth potential of the market.
The previous highs of the price cycles, especially in late 2013 and 2017, were accompanied by a significant gap between the two metrics. This time, however, the reverse is true, and there is a good chance that Bitcoin is a solid ‘buy’.
As Cointelegraph reported, estimates predict a six-figure price for Bitcoin by the end of the year. The fourth quarter should be the springboard, with October forming a solid foundation with a minimum monthly close of $ 63,000 USD.
“October $ 63,000 is only + 31% as of today,” PlanB added last week.
The “worst case scenario” for September stands at $ 43,000 for the monthly close.
“The best bear market of all time”
It’s a classic setup that has historically ruled out major periods of bull price action and Bitcoin is relatively close to all-time highs, but no one is interested.
Despite trading at almost $ 50,000 USD, Bitcoin is a topic on the lips of fewer and fewer people this month, a trend also evident among internet users.
Google Trends data shows that “Bitcoin” is just as unpopular as it was in mid-July, when BTC was trading at just over $ 30,000 USD.
Google Trending Data for “Bitcoin”
Source: Google Trends
It wasn’t until December 2020 that relative interest in research waned, before the main phase of Bitcoin’s bull run really took off.
However, as analyst William Clemente suggests, such conditions are perfect for BTC’s price action to cause a surprise surprise.
“Bitcoin broke off a bull flag last night, set a higher high, 0.01% funding, and my flow is quiet. Excellent, “he tweeted on Sunday, earlier wryly describing the current circumstances as” the best bear market ever. “
Crypto Fear & Greed Index on September 19
Investor sentiment is also in an ideal position at the moment, with the Crypto Fear & Greed Index in “neutral” territory as Bitcoin circles final resistance before $ 50,000 USD.
The “greed” has yet to reappear in a meaningful way in the cryptocurrency markets, as the number of withdrawals made on speculative exchanges in early September showed.
Par William Suberg, Cointelegraph
William Suberg got into Bitcoin while completing his master’s degree and hasn’t looked back since, writing about everything cryptocurrency that makes him sit back and get your attention. He started working with Cointelegraph in October 2013.
The opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and business move carries risk, you should do your own research when making a decision.
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